I'm taking it that 'omnium primum' means that Numan was the first of all (the Kings?) and then we have 'ratus est' - thought - and then metum....iniciendum esse - gerundive - translated probably as an English particple or infinitive. So I would translate the first part of this as follows:

Numa was the first of all to think of instilling fear of the gods into (Romanis is dative, right?) the Romans.

'descendere' here I take to mean 'penetrate' or 'move'. So I would continue: 'He could not, with out some divine miracle, move the spirits [of the people] he pretended [is Livy really so candid?] to have had nightly conversations with the goddess Egeria: 'by her warning he himself should institute fitting sacrifices to the gods [sacrifices that would be fitting - pluperfect subjunctive] and appoint appropriate / special priests to her of (in preference to / above the other?) the gods'.

omnium primum here means "first of all things". Primum is an adverb here. Romanis is indeed dative, the complement of the preverb in-[iciendum]

ratus est -- you could translate this here "decided". "Numa decided that before anything else fear of the gods needed to be thrown into the Romans."

You might translate descendere ad as "get down to the level of": "Since he could not get down to the level of the Romans' mind-sets without some divine miracle . . ." Alternatively, deorum metum might also be taken as the subject of descendere non posset: "since fear of the gods could not get down into the Romans' minds . . . " In either case, the idea is that the Romans' minds were at a primitive level, requiring a cheap miracle.

"pretended [is Livy really so candid?]" -- yes. There was a limit to what Livy's readers could swallow. But it's clear from the context that Numa is telling lies about Egeria--he had to do so because the primitive Romans needed a cheap miracle as a basis for religion.

instituere and praeficere are infinitves because they are indirect (reported) speech (oratio obliqua). The speech act is implicit in simulat: this is what Numa told the people when he told them about his nightly conversations with Egeria.

essent is subjunctive in indirect speech: it's part of what Numa is reported as saying.

The gloss proprios suggests that suos refers to each god: he [Numa] was appointing each god's own priests dedicated to that god alone. Syntactically, suos here, in indirect speech, could refer back to Numa, the subject of the speech act, but treating suos as referring to each god makes more sense here.